Arbeitspapier
The effects of disclosure policy on risk management incentives and market entry
This paper studies the effects of hedge disclosure requirements on corporate risk management and product market competition. The analysis is based on a simple model of market entry and shows that incumbent firms engage in risk management when these activities remain unobserved by outsiders. The resulting equilibrium is desirable from a social standpoint. Financial markets are well informed and entry is efficient. However, potential attempts for more transparency by additional disclosure requirements introduce a commitment device that provides firms with incentives to distort risk management activities thereby influencing entrant beliefs. In equililibrium, firms engage in significant risk-taking. This behavior limits entry and adversely affects the nature of competition in industries. Our findings thus suggest that more disclosure on risk management may change risk management in socially undesirable ways.
- Language
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Englisch
- Bibliographic citation
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Series: KIT Working Paper Series in Economics ; No. 65
- Classification
-
Wirtschaft
Asymmetric and Private Information; Mechanism Design
- Subject
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Risk Management
Hedge Disclosures
Market Entry
Signal Jamming
- Event
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Geistige Schöpfung
- (who)
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Hoang, Daniel
Ruckes, Martin
- Event
-
Veröffentlichung
- (who)
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Karlsruher Institut für Technologie (KIT), Institut für Volkswirtschaftslehre (ECON)
- (where)
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Karlsruhe
- (when)
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2014
- DOI
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doi:10.5445/IR/1000044664
- Handle
- URN
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urn:nbn:de:swb:90-446642
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Hoang, Daniel
- Ruckes, Martin
- Karlsruher Institut für Technologie (KIT), Institut für Volkswirtschaftslehre (ECON)
Time of origin
- 2014
Other Objects (12)
Risk disclosure, risk perception and the firm's market risk
Financial statements tax disclosure - management incentives and usefulness
Risk management committee and textual risk disclosure
Incentives and Risk Sharing in a Stock Market Equilibrium
Disclosure Risk from Factor Scores
Disclosure risk from factor scores
Disclosure, transparency, and market discipline
Incentives to Acquire Information under Mandatory versus Voluntary Disclosure
Corporate risk disclosure and corporate governance
Risk disclosure and corporate cash holdings
Risk information in non-financial disclosure
Market entry strategies : text, cases and readings in market entry management
Risk disclosure, risk perception and the firm's market risk
Financial statements tax disclosure - management incentives and usefulness
Risk management committee and textual risk disclosure
Incentives and Risk Sharing in a Stock Market Equilibrium
Disclosure Risk from Factor Scores
Disclosure risk from factor scores
Disclosure, transparency, and market discipline
Incentives to Acquire Information under Mandatory versus Voluntary Disclosure
Corporate risk disclosure and corporate governance
Risk disclosure and corporate cash holdings
Risk information in non-financial disclosure
Market entry strategies : text, cases and readings in market entry management
Risk disclosure, risk perception and the firm's market risk
Financial statements tax disclosure - management incentives and usefulness
Risk management committee and textual risk disclosure
Incentives and Risk Sharing in a Stock Market Equilibrium
Disclosure Risk from Factor Scores
Disclosure risk from factor scores
Disclosure, transparency, and market discipline
Incentives to Acquire Information under Mandatory versus Voluntary Disclosure
Corporate risk disclosure and corporate governance
Risk disclosure and corporate cash holdings
Risk information in non-financial disclosure